2025-02-21 14:21
Russia may concede frozen assets for Ukraine reconstruction, sources say Russia will demand some of the funds for territories it controls, sources says US and Russian officials met in Riyadh, not clear if frozen funds discussed MOSCOW, Feb 21 (Reuters) - Russia could agree to using $300 billion of sovereign assets frozen in Europe for reconstruction in Ukraine but will insist that part of the money is spent on the one-fifth of the country that Moscow's forces control, three sources told Reuters. Russia and the United States held their first face-to-face talks on ending the Ukraine war on Feb. 18 in Saudi Arabia and both U.S. President Donald Trump and Russian President Vladimir Putin have said they hope to meet soon. After Putin sent troops into Ukraine in 2022, the United States and its allies prohibited transactions with Russia's central bank and finance ministry, blocking $300-$350 billion of sovereign Russian assets, mostly European, U.S. and British government bonds held in a European securities depository. While discussions between Russia and the United States are at a very early stage, one idea being floated in Moscow is that Russia could propose using a large chunk of the frozen reserves for rebuilding Ukraine as part of a possible peace deal, according to three sources with knowledge of the matter. Swathes of eastern Ukraine have been devastated by the war and hundreds of thousands of soldiers killed or injured on both sides while millions of Ukrainians have fled to European countries or Russia. A year ago, the World Bank estimated reconstruction and recovery would cost $486 billion. The sources spoke to Reuters on condition of anonymity due to the sensitivity of the discussions and because discussions are only preliminary. The Kremlin declined to comment. The idea that Russia may agree to using the frozen money to help rebuild Ukraine has not been previously reported, and may give an insight into what Russia is willing to compromise on as Moscow and Washington seek to end the war, at a time when Trump is pushing for U.S. access to Ukrainian minerals to repay Washington's support. Russia's main demands to stop the fighting include a withdrawal of Kyiv's troops from Ukrainian territory Moscow claims and an end to Ukraine's ambitions to join NATO. Ukraine says Russia must withdraw from its territory, and wants security guarantees from the West. The Trump administration says Ukraine has unrealistic, "illusionary" goals. Reuters could not establish whether the idea of using the frozen funds was discussed between Russia and U.S. counterparts in the Saudi meeting. The Group of Seven stated in 2023 that the Russian sovereign funds will remain frozen until Russia pays for the damage it inflicted in Ukraine. Trump has said he would like Russia to return to the G7, a grouping of wealthy nations. Russian Central Bank Governor Elvira Nabiullina said on Thursday the bank was not part of any talks on lifting sanctions or unfreezing of Russia's reserves. Russia has previously said plans to use the funds in Ukraine amounted to robbery. The Ukrainian foreign ministry and the White House did not immediately respond to requests for comment. The British Foreign Office declined to comment. "Nothing about Ukraine and the EU can be decided without Ukraine and the EU," said Anitta Hipper, a spokesperson for the European Commission. She said the EU and member states were helping Ukraine strengthen its position ahead of any talks, including with a new round of sanctions on Russia. Renaissance Capital lead analyst Oleg Kouzmin said the differences between the United States and Europe, which controls most of the assets, would complicate a lifting of the freeze. "It would require the European side to fully back the current stance of the U.S. aimed at dialog with Russia," Kouzmin said, calling such a scenario "very optimistic". TWO THIRD SPLIT? Russia's frozen sovereign assets have been the subject of intense debate in the West with some proposing it be essentially given to Ukraine through a complex "repatriation loan" , opens new tab. One source with knowledge of the discussions in Moscow said that Russia could accept up to two-thirds of the reserves going to the restoration of Ukraine under a peace deal, provided there were accountability guarantees. The rest could go to the Russian-controlled territories in eastern Ukraine that Russia now considers to be part of Russia, said the source. Another source with knowledge of discussions said that Moscow would agree to using the money to rebuild Ukraine but that it was too early to say what the possible division might be. Two sources stressed that it was important to discuss which companies would get future contracts for reconstruction. A different source, close to the Kremlin but not directly involved in the discussions, said that Russia would still demand the lifting of the freeze on the assets as part of gradual sanctions relief. Several Western officials, especially in the German government and European Central Bank, have been reluctant to simply confiscate sovereign reserves, warning that such a move could face legal challenges and undermine the euro as a reserve currency. Russian officials have repeatedly warned that the state confiscation of assets goes against free market principles, destroys banking security and erodes faith in reserve currencies. In retaliation, Russia has drafted legislation to confiscate funds from companies and investors from so-called unfriendly states, those that have hit it with sanctions. The bill has not yet been voted in Russia's State Duma lower house. EUROPEAN FREEZE At the time the assets were frozen, Russia's central bank said it held around $207 billion in euro assets, $67 billion in U.S. dollar assets and $37 billion in British pound assets. It also had holdings comprising $36 billion of Japanese yen, $19 billion in Canadian dollars, $6 billion in Australian dollars and $1.8 billion in Singapore dollars. Its Swiss franc holdings were about $1 billion. Russia reports its total gold and foreign exchange reserves as around $627 billion, including the frozen funds. The value of Russia's frozen assets fluctuates according to bond prices and currency movements. The bank's biggest bond holdings were in the sovereign bonds of China, Germany, France, Britain, Austria and Canada. Russia's gold reserves were held in Russia. Around 159 billion euros of the assets were managed by Belgian clearing house Euroclear Bank as of early last year, Euroclear has said. While the freezing of the funds has angered Moscow, some of Russia's most outspoken war hawks have previously acknowledged Russia may eventually part with the frozen reserves, provided that the controlled territories stay within Russia. "I propose a solution. They pay this money towards our purchase of those territories, those lands that want to be with us," said Margarita Simonyan, head of the Russian state broadcaster RT, in 2023. The Russian-controlled territories of Ukraine account for about 1% of Russia's gross domestic product, but some economists believe that their share could grow quickly if they remain with Russia when the war ends. The regions already provide around 5% of Russia's grain harvest. 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2025-02-21 14:16
UK data and surveys send different signals about economy PMI points to job losses ahead But recruiters group reports pickup in job postings Labour market and inflation data show price pressures Bank of England has said it will be careful on rates LONDON, Feb 21 (Reuters) - A flurry of often contradictory UK economic data and surveys this week has left the Bank of England none the wiser about whether Britain's economy is more at risk of a wave of job losses or a new period of persistently high inflation. A closely watched survey of businesses - the Purchasing Managers' Index - suggested on Friday that firms this month cut staff at the fastest pace since the COVID pandemic, and almost as sharply as after the collapse of U.S. investment bank Lehman Brothers at the height of the global financial crisis in 2008. Employers have been up in arms about an increase in the social security contributions that finance minister Rachel Reeves announced in October and which are due to start in April, at the same time as a nearly 7% rise in the minimum wage. Several other surveys have pointed recently to companies making redundancies or choosing not to replace departing staff. But data from a recruitment industry group also published on Friday showed the number of job postings rose for the first time in seven months in January, suggesting the jobs market might in fact be weathering the higher tax hit. Earlier in the week, official figures showed the labour market held up better than expected at the end of 2024, while inflation in January came in stronger than forecast too. In a sign of surprising strength among consumers, data on Friday showed retail sales volumes rose in January for the first time since last August, but another survey showed that weak consumer confidence improved only slightly. Certainly, the economy looks to be on a stabler footing than when inflation peaked at 11.1% in October 2022, forcing the BoE to raise interest rates to their highest in 15 years which only added to squeeze on consumers and businesses. 'STAGFLATION' DILEMMA But the often conflicting signals show why the central bank has said it will move only gradually and carefully with its next rate cuts after lowering them for only the third time since August this month. "It all confirms this policy dilemma for the Bank of England and the stagflationary situation that the UK finds itself in," Ross Walker, head of global economics at NatWest Markets, said. It also creates a difficult picture for Reeves who may have to announce further public spending restraint or higher taxes next month if she is judged to be off course to meet the fiscal targets that she set herself less than four months ago. Figures published on Friday showed weaker than expected tax revenues in January. Britain's economy barely grew in the second half of 2024 and the BoE recently halved its forecast for growth in 2025 to just 0.75%. But it also expects inflation to peak at 3.7% between July and September, up from 3.0% now, before falling back. Some economists now think inflation could hit 4%, double the BoE's target. The slow-growth, sticky-inflation conundrum facing the BoE was highlighted by the PMI survey on Friday. As well as cutting jobs, businesses said they were facing higher costs as suppliers jacked up their prices in anticipation of April's higher social security costs and an increase in the minimum wage. Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, said the BoE might take some comfort from signs in the PMI that services firms were absorbing some of their higher costs rather than passing them on via higher prices, but history suggested they would try to rebuild their margins soon. "All told, the Monetary Policy Committee will have to be cautious as the employment balance looks too catastrophic to be plausible while price balances look too plausible to be ignored given the strong labour cost pressures coming down the line," Wood said in a note to clients. Sign up here. https://www.reuters.com/world/uk/uk-economy-readings-underscore-bank-englands-dilemma-2025-02-21/
2025-02-21 12:59
BRASILIA, Feb 21 (Reuters) - A major challenge of Brazil's income tax reform plan will be bringing people who do not currently pay the levy into the system for the first time, Finance Minister Fernando Haddad said on Friday. The centerpiece of the tax overhaul, which was unveiled late last year, sparking market turmoil, will exempt Brazilians earning up to 5,000 reais ($876) per month from income tax, up from the current threshold of two minimum wages, or 2,824 reais. Haddad said some of the revenue loss from that step would be offset by bringing non-payers into the system, but he acknowledged the difficulties of doing so. "The challenge will not be exempting more (workers). The challenge will be to compensate for this by burdening those who do not pay," he said in an interview with local media outlet ICL. Haddad added that achieving economic growth coupled with low inflation was an "obsession" for President Luiz Inacio Lula da Silva's government. Amid an aggressive monetary tightening cycle led by the central bank, Haddad said it was "part of the game" to use interest rates to control inflation. Since September, interest rates have already risen by 275 basis points to 13.25%, and policymakers have signaled another 100 basis-point hike in March to curb inflation, which they project to exceed 5% this year, above the official 3% target. Asked about next year's presidential election, Haddad said he thought Lula would be a strong candidate, saying the 79-year-old president was in good health. Haddad reiterated that he had no plans of running for political office himself. Haddad also said the government plans to maintain subsidized credit lines for agribusiness under its so-called "Plano Safra," but emphasized that the approval of this year's budget - still pending congressional sign-off - is necessary to ensure funding. On Thursday, the Treasury said that, due to the budget deadlock, financing under the 2024/25 Plano Safra would be suspended from Friday except for credit lines for small farmers. ($1 = 5.7092 reais) Sign up here. https://www.reuters.com/world/americas/brazil-sees-challenge-offset-broader-exemption-income-tax-reform-2025-02-21/
2025-02-21 12:35
MUMBAI, Feb 21 (Reuters) - India's inflation is seen aligning with the target of 4%, which opens up space for monetary policy to address concerns on the growth front, members of the rate-setting committee said in the minutes of the latest meeting released on Friday. Earlier in February, India's Monetary Policy Committee (MPC) cut the repo rate by 25 basis points in the first such move in nearly five years. The MPC includes three Reserve Bank of India members and three external members. "There is a need to preserve the high growth momentum over the medium term, necessitating monetary policy to be sensitive to the evolving growth scenario and use various policy instruments including liquidity injection to reinvigorate growth," Rajiv Ranjan, an RBI executive director and member of the MPC said. India's government has forecast annual growth at a four-year low of 6.4% for the year ending March. Subdued private consumption due to low real wage growth is a factor behind the slowdown, but excessively contractionary monetary policy has aggravated the problem, external member Ram Singh said. A demand push will not result in higher private capital expenditure unless interest rates are reduced immediately, Singh argued, saying the government has provided the push through income tax cuts in the budget. The MPC members agreed that inflation is on a downward trajectory. India's retail inflation slowed to a five-month low of 4.31% in January as food price inflation eased. India's budget proposals on agriculture and the commitment to fiscal consolidation are positive for price stability and would help anchor inflation expectations over the medium term, RBI Governor Sanjay Malhotra said. "The food inflation outlook is turning decisively positive," he said. India's central bank targets inflation at 4% with a tolerance band of 2 percentage points on either side. "Given the forecast inflation trajectory, the policy repo rate might soon, if not even as of now, become excessively restrictive, thereby increasing the risk of cumulatively damaging growth impulses," external member Saugata Bhattacharya said. External member Nagesh Kumar said the panel could be more ambitious and target a 50-basis-point cut but voted for 25 basis points given global uncertainties. "It would send a signal to the markets and private investors within and outside the country that India is serious and would do whatever it takes to revive economic growth momentum," he said. Sign up here. https://www.reuters.com/markets/rates-bonds/indias-rate-panel-shifts-focus-growth-inflation-seen-easing-minutes-show-2025-02-21/
2025-02-21 12:35
53% of Americans believe economy is on wrong track, Reuters/Ipsos poll shows Egg prices soar due to avian flu and rising feed costs Older Americans increasingly seek roommates to offset housing costs, SpareRoom data shows NEW YORK, Feb 21 (Reuters) - This was originally published in the Reuters On the Money newsletter, where we share U.S. personal-finance tips and insights every other week. Sign up here to receive it for free. How are you feeling financially these days? According to new research from Reuters, more Americans are worried about the U.S. economy, prompted by concerns about tariffs. The share of Americans who think the economy is on the wrong track rose to 53% in the latest Reuters/Ipsospoll from 43% in the January 24-26 poll. And another survey shows that one in five Americans say they are purchasing more items than usual, reflecting heightened anxiety over potential price hikes and economic uncertainty. (Just writing this sentence takes me back to the early days of the COVID pandemic in March 2020, when supermarket shelves were bare.) Tariffs tend to spark inflation because they raise the cost of imported goods. As a result, businesses either absorb the higher expenses or pass them on to consumers through price increases. What are your thoughts about the economy and tariffs? Let me know at And if you are stocking up on anything in particular right now – such as maple syrup from Canada or tequila from Mexico – I want to hear about it. If you are scrambling to find a carton of eggs these days, you are not alone. At my local Trader Joe’s in Brooklyn, you could not find eggs last week. Shoppers across the U.S. face record egg prices , opens new tab, as well aspurchasing limits , opens new tab, due to a tightening supply chain of eggs exacerbated by the ongoing avian influenza outbreak, which resulted in the death of millions of chickens across the country. Since the start of the bird flu outbreak in February 2022, more than 157 million , opens new tab birds in commercial and backyard flocks have been impacted by the highly pathogenic H5N1 strain, as well as the less common H5N9. Millions of birds have been culled , opens new tab, leading to a shortage of eggs and driving up prices. The latest monthly consumer price index showed that the average price of a dozen Grade A eggs in U.S. cities reached $4.95 in January , opens new tab, higher than the previous record of $4.82 set two years ago. At another grocery store closer to my home, a carton of organic eggs costs more than $14. The average price of a dozen large eggs increased by more than 50% in the past year nationwide. There were even bigger price hikes in some metropolitan areas. The rising cost of feed, particularly corn and soybeans, is also pushing egg prices higher. A severe drought in the Midwest, coupled with the ongoing conflict in Ukraine, is leading to a global shortage of these commodities. The cost of corn jumped by 20% in the past year, while soybean prices rose by more than 30%. Earlier this month, thieves stole about 100,000 organic eggs from a wholesaler's warehouse in Pennsylvania, a haul worth more than $40,000 retail amid a national shortage that has caused prices to surge. This Sunday I plan to head over to the local farmer’s market early to buy a carton of eggs. I imagine the price will be high but at least they will be farm fresh. What’s your experience purchasing eggs lately? Write to me at Like what you're reading? Subscribe to On the Money here. After two years of underperformance, international equity funds started 2025 with strength. Todd Rosenbluth from VettaFi says investors are feeling more comfortable with prospects outside of America despite the threat of tariffs. Watch his interview here. Finding a roommate to offset housing costs seems like a logical move at a young age. But it turns out more older Americans are looking for roommates, too. Some 6% of all live-in landlords who use the roommate-matching service SpareRoom , opens new tab are ages 65 and up and another 14% are ages 55-64, but these two age groups are the fastest-growing, according to Matt Hutchinson, directorat , opens new tabSpareRoom. I asked Hutchinson some questions about finding a roommate at a mature age. This interview is edited and condensed. Q. How is living with a roommate different as you age? What tips do you have for making it work? A. This is certainly not true for everyone, but it can be the case that – as we get older – we grow more accustomed to our own way of living. It can be a daunting prospect to shake things up and share our living space with friends or strangers. It’s important to remember there’s no such thing as the perfect roommate, just your perfect roommate. Some people want to socialize together, some want a purely financial relationship and separate lives and most want something in the middle! Talking about that up front is always best. Similar expectations of what living together will be like are the simplest way to avoid issues once you actually do live together. We asked a bunch of homeowners who’d rented out a room for their advice on how to find the best roommate. Here is their list of It’s interesting what people pick up on: Some judge potential roommates based on whether a person offers to take their shoes off at the front door or how well they get along with the dog. Q. What is the best way to handle chores, bills, etc.? A. Draw up a written agreement. In addition to rent, security deposit and insurance, it should also include house rules , opens new tab around things like guests, pets, noise, cleaning, smoking and use of shared spaces and facilities. Here are our tips on approaching cleaning with roommates , opens new tab. Similarly, bills can be a key sticking point. The same advice applies here: talk early and openly. Some homeowners will include bills with the rent, which can help their roommate budget better, others want to split the bills equally as they come in. Here is our guide to talking to roommates about money , opens new tab. A$K Lauren Are you wondering if you should rent out your home? Do you need a life insurance policy? Send your personal finance questions to Sign up here. https://www.reuters.com/markets/us/money-why-more-americans-are-worried-about-economy-2025-02-21/
2025-02-21 12:30
NAPERVILLE, Illinois, Feb 20 (Reuters) - Global soybean exporting giant Brazil has increased plantings of the oilseed for 18 consecutive years, a staggering streak unmatched in the industry. But for how much longer can Brazil continue boosting area before potentially running into an oversupply situation? The United States encountered a similar scenario a few years ago, and this, along with recent trends in the Chinese economy, could offer some possible insight for Brazil’s future. Around 2000, the United States accounted for at least 50% of annual world soybean exports, and Brazil supplied just under 30%. Brazil took over as top soybean exporter in 2012-13 after a three-year string of crop shortfalls in the United States, and it was around this time that some of Brazil’s heaviest year-on-year increases in soybean area were observed. Brazil has never relinquished the top supplier crown and currently accounts for about 57% of exports, while the U.S. share has dropped to 28%. USA RECKONING A decade ago, Chinese soybean demand was booming, and world soybean supplies were consistently overestimated as a result. U.S. farmers in 2017 boosted soybean acres above 90 million, some 8% above the previous year’s record. They nearly repeated this feat in 2018 despite very plentiful stock levels because the market dynamics, specifically the elevated prices of soybeans versus corn, called for it. This was likely going to produce burdensome supplies by itself, but it turned out far more disastrous as the United States and China in mid-2018 plunged into a trade war, choking off U.S. exports. Making matters worse was the drop in Chinese soy demand because of disease outbreak throughout its hog herds. As a result, U.S. soybean stocks by mid-2019 surged more than 60% above the prior record, though the market was bailed out of a longer-term, unmanageable situation by a steep, weather-driven acreage loss in 2019. U.S. soybean plantings have never since threatened to return to the 2017 high. That is especially true this year with corn prices unusually strong versus soybeans, which many farmers are struggling to find profitable. Since the start of 2024, Chicago soybean futures have tumbled almost 20%. But priced in Brazilian reais , beans are down only 5% in this period, signaling for the Brazilian farmer to continue churning out bigger crops. The sharp weakening of the real throughout 2024 was favorable for Brazilian producers, who sell their crops in dollar terms. However, Brazil’s currency has strengthened notably since the beginning of 2025, and a continuation of this trend could eventually threaten Brazil’s expanding soy area if its producers are no longer seeing the profit advantage. CHINA RISKS More than 70% of Brazil’s annual soybean exports go to China, the world’s leading buyer. Over its 18-year streak, Brazil’s soybean area has increased by 130%. At the same time, China’s soybean consumption has risen 175%, though the recent growth rates are not as strong as they were a decade ago. However, total global soybean consumption has risen just 80% over the last 18 years, highlighting the increasingly strong degree to which Brazil’s soy industry depends on China. Obviously that strategy has worked thus far, but is it a reliable trend? China’s cooling economy may instill some doubts. China’s annual economic growth rate has been slowing for the better part of two decades, and that shrinkage is generally expected to continue through this decade. Additionally, China’s population in 2024 fell for a third consecutive year. Not only could these factors pressure demand for certain food staples, but China over the last few years has taken steps to directly reduce soybean demand and dependence on imports by cutting soymeal rations in animal feed. This is not exactly the China that the global soybean market was sold on 10 years ago, and the U.S. soybean industry has grown cognizant of these developments ever since the first trade war, albeit somewhat reluctantly. But the longer-term risks may reside with Brazil, which has yet to discover just how many soybeans are too many. Karen Braun is a market analyst for Reuters. Views expressed are her own. Sign up here. https://www.reuters.com/markets/commodities/brazils-ever-expanding-soybean-area-may-face-challenges-china-braun-2025-02-21/
